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Author: Age NI Enterprises
Published on 22 February 2011 12:00 AM

Over 55s an average £30 per month worse off due to rising prices since September


Latest data from the Silver RPI published by Age NI Enterprises, the commercial services arm of charity Age NI, shows that, since January 2008, the average person aged over 55 has experienced price increases at five percent above headline inflation measures.

Latest figures show the gap between the price rises experienced and headline RPI1 now costs an average over 55 year old £907.202 a year, which is a £303 rise in the monthly cost of living since September 2010.

Age band

% difference between Silver RPI and headline RPI since January 2008

Average cost of gap between Silver RPI and headline inflation per year since January 2008

55-59

3.4 %

£904

60-64

4.2 %

£1,015

65-69

4.9 %

£1,038

70-74

5.3 %

£925

75+

4.9 %

£654

Average over 55

5.0%

£907.20


The Silver RPI is published to coincide with the Bank of England Quarterly Inflation Report in February 2011 and shows that the gap between costs for those in later life and the general population has widened. This is due to the continued impact of low mortgage interest rates which have less effect on those in later life as they are less likely to carry mortgage debt, and in the last quarter, cost increases in products and services such as heating oil and food that over 55s spend proportionally more on.

Commenting on the findings, Ron Warwick, General Manager, Age NI Enterprises said: “The latest Silver RPI demonstrates the shocking impact of rising prices on over 55s who are now more than £907.20 a year worse off than official inflation measures estimate.  There is a widening gap between the inflation experienced by the general population and those in later life, and this worsens with age. A typical 70-74 year old now experiences ‘real’ price rises at 5.3 percent above headline RPI figures.”

He continued: “The Silver RPI suggests that for too long official measures have misrepresented how finances look for those in later life by considering over 55s as one single group who experience money (and inflation) in the same way. We need greater recognition of the reality of money for those in later life. It is time the financial services industry moved from its ‘one size fits all’ approach to develop, as we do, products and services tailored for this increasingly important section of the population.’
 
Erik Britton from Fathom Consulting said: “The Silver RPI shows that inflation has been far higher over the last few years for those over 55 than for the general population. Inflation effects are not homogeneous, and measuring those differences helps those in later life plan for their financial future by taking them into account.”

The Silver RPI was developed by Age UK Enterprises in partnership with former Bank of England inflation specialists, Fathom Consulting, and is the most complete measure of cost increases in later life. It uses information from the Living Costs and Food Survey (LCF) to re-weight the 78 items that make up the official RPI and better reflect the expenditure patterns of over 55s. The measure is the first to consider inflation at five year age bands above 55 years of age and unlike existing ONS pensioner measures it includes all housing costs and households at all income bands. The Silver RPI launched in November 2010 and is updated quarterly, with the methodology adjusted for the February report to include more up to date information on expenditure patterns.

- Ends -

For more information please call Jackie Logan at Carlton Baxter Communications, on (028) 9032 5533 or email jackie@carltonbaxter.com

  1. Headline RPI for over 55s is 5.1% (ONS: January 2011)
  2. The additional costs faced by older consumers is calculated by multiplying the difference in percentage change in prices faced by each age band and that faced by the population as a whole since January 2008. This is then multiplied by the average weekly expenditure for that age band and finally multiplied by the number of weeks in a year (52) to establish the annual cost of these extra price rises.
  3. Calculated by applying the average increase in prices since September 2010 experienced by those aged over 55 (1.95%) to the monthly cost of the RPI basket to those aged over 55 in 2008 (£1710.61).
  4. Average headline RPI rates: 2008 - 4.3%, 2009 - 0.78%, 2010 – 4.6%

 

Notes to Editors

About Erik Britton, Director at Fathom Consulting:
Erik Britton joined Fathom as a director in October 2007. He has 18 years of experience as a professional economist and was formerly a director at Oxford Economics. Prior to Oxford Economics, Erik was involved in economic modelling and forecasting, first at a London-based consultancy called MMD, and then at the Bank of England. At the Bank of England, Erik spent five years in the Monetary Analysis Division where he ran the Bank's UK macroeconomic model, co-ordinated its international forecast, and also managed a team of economists responsible for analysing the economics of the corporate sector.

 

About Fathom Consulting:
Fathom Consulting is an independent consultancy which combines macroeconomic analysis together with financial market research. Fathom’s team of economists combine a high degree of technical expertise with many years of practical experience in policy‐making and financial institutions. Their combined experience of analysing both the global economy, the UK and the Bank of England in particular, is unrivalled by any other private sector institution in the UK.

 

About Age NI:

Age NI is the new charity combining Age Concern NI and Help the Aged in Northern Ireland. The Age UK family includes Age Scotland, Age Cymru, and Age NI.

Age NI delivers care services, provides advice and advocacy, fundraises and influences decision-makers to improve later life for us all. Age NI tackles ageism where it exists, fights for enough money for older people to live in dignity and demands the quality of care that people in later life deserve.  Visit www.ageni.org to find out more about the charity. 

Age NI is a charitable company limited by guarantee and registered in Northern Ireland: registered office address 3 Lower Crescent, Belfast, BT7 1NR.  Company number NI071940, HMRC Charity reference number XTI4600.  

 

About Age NI Enterprises:

To fund its charitable activities, Age NI needs a constant flow of independent income. It seeks to achieve this through a balance of traditional fund raising and trading activities.

The trading activities, through Age NI Enterprises, enable it to meet the needs of older people, through products specifically designed to meet these needs; quality products such as general insurance and funeral plans.

Age NI Enterprises products incorporate: personal alarms, travel insurance, motor insurance, home insurance, funeral plans, annuities and equity release.  Age NI Enterprises is the commercial services arm of Age NI.

Age NI Enterprises is based at 10 College Street, Belfast BT1 6BT or contact 0800 100 4545.

Age UK Motor Insurance is now proudly on Which? Magazine’s Recommended Providers List of car insurers. Which? Magazine analyse the whole UK car insurance market to find out which brands offer the best policies. Instead of picking Best Buys based on specific scenarios (that are only relevant in specific cases), the experts at Which? magazine focus on the quality of policies.

 

For more information: Call Age NI Advice: 0808 808 7575